Animoca Brands, a provider of digital entertainment, blockchain, and gamification technologies, along with venture accelerator Brinc, today announced the launch of Launchpad Luna, a new accelerator program to identify, mentor, and invest in promising blockchain and non-fungible tokens (NFT) startups.
Launchpad Luna will also accept high-potential startups seeking to adopt blockchain and NFTs into their core business. The Launchpad Luna accelerator will identify and foster NFT innovation in the fields of culture, art, entertainment, media, gaming, streaming, collectibles, insurance, finance, and data management; DeFi and additional verticals will be added in the future.
High-potential early-stage projects and startups that are accepted into the acceleration program will receive training, a launchpad, and a monetary investment of up to USD $500,000 (or equivalent) in exchange for equity and tokens.
Admission to the program will be prioritized for climate-conscious projects that drive digitalization that place emphasis on proof-of-stake protocols and sidechains instead of proof-of-work, and that have lower overall physical footprints. Accepted entrants will receive training in optimizing a blockchain business to minimize energy use and carbon emissions. This is in line with Brinc’s plan to invest and support the development of more than 1,000 climate-conscious startups in the next five years.
Startups accepted into the Launchpad Luna program will benefit from a unique combination of technical resources on product development, token design, fundraising, marketing, research, analytics support, and data management. Startups will also receive support to help them scale all aspects of their businesses; including access to world-class mentors in the crypto world along with key exchanges, chains, marketers, and investors within the networks of Animoca Brands and Brinc.
“Launchpad Luna is an initiative that furthers our mission to enable a more inclusive digital economy and we are honored at the level of enthusiasm and support we have received from the global NFT community. We are thrilled to be doing this with Brinc, the number one accelerator in the region. Brinc’s presence and network significantly increase our pathways into Europe, the Middle East, and China. And we look forward to establishing a new ecosystem of accelerators and startups at the epicenter of regional start-up activity that will allow us to contribute to the shape of the future.”
– Yat Siu, Co-Founder & Chairman of Animoca Brands
In early 2021, Brinc took over management of the investments into 50 AI-focused companies from Zeroth.ai; Animoca Brands’ accelerator for artificial intelligence startups. This collaboration laid the foundation for the new accelerator program; as both organizations recognized a broader opportunity to scale value creation by leveraging each other’s expertise.
Brinc and Animoca Brands bring together leading experts in their respective fields. Brinc has made over 160 investments and is one of the world’s leading venture accelerators. Animoca Brands has invested in more than 60 businesses that are built around the use and/or trade of NFTs and has launched various blockchain projects including The Sandbox metaverse and the REVV Motorsport token and platform.
“As we bring Launchpad Luna to market, we could not think of a better partner than Animoca Brands; which has proven successes with projects like REVV Motorsport and The Sandbox. Given the rapid evolution of this market; startups need a support system to navigate the shifting landscape of platforms, chains, and go-to-market strategies. While investors need confidence that the projects they are backing have solid foundations and are ready for growth and scale.”
– Manav Gupta, Founder & CEO of Brinc
The accelerator has support from various mentors and partners with an interest in the NFT space including AppWorks, Blockparty, Dapper Labs (the company behind CryptoKitties, NBA Top Shot, and Flow Blockchain), EllioTrades, Featured by Binance, Gabby Dizon (co-founder of Yield Guild Games), Harmony (ONE), Hedera Hashgraph (HBAR), Mai Fujimoto (Miss Bitcoin), Mateen Soudagar (DCLBlogger), Metakovan (Metapurse), Mindfund, Sebastien Borget (co-founder of The Sandbox and chairman of the Blockchain Gamer Alliance), Virtually Human Studio (creators of ZED RUN), WhaleShark, and others.
For those interested, Launchpad Luna is now accepting applications.
VeChain Reveals Roadmap To PoA 2.0, Major Bullish Catalyzer?
VET has seen a 5.7% profit in the daily chart after the VeChain Foundation (VF) published the roadmap for the Proof-of-Authority (PoA) 2.0. At the time of writing, VET trades at $0,068.
VET closing in on important resistance levels in the daily chart. Source: VETUSDT Tradingview
A major milestone for the project, the foundation expects to eliminate the tradeoffs from the Nakamoto Consensus and Byzantine Fault Tolerance (BFT) consensus used by Bitcoin and other cryptocurrencies.
The new PoA 2.0 consensus will enable the blockchain VeChainThor to leverage a high throughput capability with guaranteed data finality.
Thus, the users and companies building on this platform can apply high volume use cases with “the highest level of data security”, according to the VeChain Foundation.
The update has been dubbed SURFACE, meaning Secure, Use-case-adaptative, Relatively Fork-free Approach of Chain Extension. Peter Zhou, Chief Scientist at the VF, said the following about the update:
The consensus algorithm is the most important part of a public blockchain. Its major upgrade on mainnet has to be done with max cautiousness. It’ll be done on VeChainThor step by step. Never expect it to be a one-off thing or you are doing it in a wrong way.
Thus, the update was roll-out to a new public testnet that implements VIP-193 and VIP-200, part of the PoA2.0 consensus, according to the project’s GitHub repository.
The proposal focuses on 3 aspects, the VRF-based source of randomness and the Committee-endorsing block producing process.
The former will improve VeChain security and the ledger’s selection mechanism, the latter will reduce the blockchain’s probability of forking, and a passive block finality confirmation process.
A Roadmap For One Of VeChain Most Important Milestones
This new update will bring what the VeChain Foundation has called the Economic Digitization, and a “clear” path to large-scale adoption. The VF added:
PoA 2.0 was developed to meet the increasing demand for better performance and greater security from the enterprise and business-tier clients developing solutions with our toolsets. With the involvement of blockchain experts from top tier VeResearch partners contributing, PoA 2.0 is a significant milestone in the entire blockchain industry.
Users can go into the testnet and deploy or build decentralized applications. The VF has enabled a faucet app that was created by the project’s core team of developers.
In the future, the VET community and stakeholders will go through a voting process to make an official implementation on the mainnet.
This update has generated great hype in the VET community. On July 13, core developers completed a stress and security test before deploying the public testnet.
Many argued that the increase in adoption and potential for massive use cases will have a positive impact on VET’s price.
In the short term, VeChain has followed the general market sentiment to the downside and must reclaim the $0.069 area if it wants to open the door of a strong rebound to previous highs.
Source: PoA 2.0 roadmap, V.F.
Can Bitcoin Bring Palestine Freedom?
One day last week I spoke to a Bitcoin user inside the Gaza Strip.
He asked to remain anonymous and go by the name Uqab — the Arabic word for “eagle” — as he took a large personal risk to talk to me.
We spoke on Telegram and had to time our call, as Uqab only has a few hours of electricity per day. For him, our chat was in the middle of the night. A Palestinian friend helped translate the call live. As we spoke, it was hard to fathom what life was like on the other end of the line.
Uqab was talking to us from Rafah, a city in the southern part of Gaza, a war zone only a few weeks removed from being heavily bombed by the Israeli military. I felt like I was speaking to someone from a different planet.
He spoke of roads destroyed, buildings vaporized, power cut and supplies restricted. A map of Israeli missile strikes makes Gaza look like Swiss cheese, and gives a sense of the structural damage.
Uqab asked me to consider how bad things have been economically around the world, even in the U.S., because of the pandemic and ensuing lockdowns, and said, “Now imagine what it’s been like for us.”
I. A Checkpoint That’s Always Open
The Gaza Strip is a piece of territory roughly five miles wide and 28 miles long, sandwiched between Israel’s southwestern corner, the Egyptian Sinai, and the Mediterranean Sea. Originally the site of a Palestinian community flooded by refugees fleeing from what is now Israel after the 1948 Arab-Israeli War, it is today one of the most densely populated places on earth. Gaza is less than half of the size of Austin, Texas, but has more than twice its population. Think Hong Kong, but besieged in a desert, with crumbling infrastructure.
Over the past four decades, the two million inhabitants — half of them under the age of 18 — have suffered from a near-total civilizational collapse.
In 2006, Hamas — which was founded on a mission to destroy Israel and does not recognize its right to exist — won the Palestinian elections, in what was widely seen as a protest vote against the extreme corruption and ineptitude that the ruling Fatah party had displayed in the 12 years since the creation of the Palestinian Authority. The elections were not deemed legitimate by many international actors — the U.S. and EU, for example, consider Hamas a terrorist group — and Fatah clung to power in the West Bank. Gazans, meanwhile, fell under the dictatorial rule of an Islamist police state. In retaliation, in 2007 the Israeli and Egyptian governments closed off Gaza from the outside world.
A 15-year-old living in Gaza today is the survivor of four major wars between the Israeli Defense Forces (IDF) and Hamas, the most recent taking place two months ago.
Between May 10 and May 21 of this year, Hamas fired more than 4,300 rockets towards Israeli cities and towns, and the IDF responded with more than 1,500 missiles of their own. This battle was the worst between the two since 2014. A UN report published last month estimated the damage at between $280 million and $380 million, and projected a recovery budget anywhere from $345 million to $485 million. Amidst the rubble, 800,000 Gazans remain without access to clean drinking water. They can only exit into the outside world officially through two checkpoints, and those had been turned on and off during the violence, too.
In 2012, the UN published a paper predicting that Gaza would be “unlivable” by 2020. That prediction is tragically accurate. According to a World Bank report published two weeks ago, even before the latest spate of bombings, the unemployment rate in Gaza was 48%, and 64% for those under the age of 30. One out of every two Gazans — including more than 400,000 children — live in poverty, and more than 80% of households are dependent on food handouts or some kind of social assistance.
According to a 2017 IMF report, war between Israel and Hamas at the end of 2008 destroyed more than 60% of Gaza’s capital stock, and the bombings in 2014 destroyed 85% of what remained. In the 25 years between 1994 and 2018, Gaza suffered a 44% decline in real GDP per capita, with Gazans going from having 96% of the average income of their West Bank counterparts, to having just 30%. This all despite having one of the world’s highest birth rates, at more than 3.5 children per family today, down from nearly seven children per family in 1990.
Outside investment in Gaza has withered from 11% of total Palestinian GDP in 1994 to just 2.7% in 2018. In the aftermath of the 2008 to 2009 war between Hamas and Israel, it was estimated that more than 90% of the strip’s factories closed. Extreme restrictions on trade with Israel took a heavy toll. Gaza’s sole power plant only operates at a fraction of its capacity, given an inability to import enough fuel and parts. The agricultural sector has collapsed, as farmers lost their main Israeli market for goods, and were forced to sell to the much smaller Gaza population at lower prices. In some cases, they had to destroy their crops.
In 2020, a UN report considered a counterfactual where Gazans did not face additional restrictions after 2006, and where instead their economy continued to grow at the same rate as the West Bank’s. In that “dream” world, per capita income would be 105.5% higher, reaching $1,539. Instead, today, in the real nightmare that Gazans live in, it is well below $1,000.
Gaza’s economic disaster is not new, and is not simply a result of the last 15 years of war and authoritarianism. Rather, it is an outcome of policies that began many decades ago. In 1987, Harvard scholar Sarah Roy published a landmark paper using years of fieldwork and interviews to reflect on the economic toll of twenty years of military occupation in the Gaza Strip since 1967. To describe what she saw, she coined a new term, “de-development.” This was the “deliberate, systematic, and progressive dismemberment of an indigenous economy by a dominant one, where economic — and by extension, societal — potential is not only distorted but denied.”
Gazan incomes and economic output rose significantly from 1967 to 1987, driven by remittances from work in Israel and abroad. But Roy observed that this flow of capital was largely used to purchase consumer goods from Israel, with two-thirds of disposable income going to private consumption by the mid-1980s. This resulted in “increased levels of consumerism within the Gaza Strip with little, if any, of the economic benefits derived from such consumerism accruing to the Strip.”
Roy noted that the high percentage of Gazan labor in Israel was not a sign of a society “experiencing typical patterns associated with the process of industrialization (or modernization) in which labor gradually shifts from agricultural to non-agricultural activities… rather, for Gaza’s labor force, the decision to seek employment inside Israel is a function of the lack of comparable options inside Gaza’s domestic economy.” By 1987, Roy could observe that the distinguishing features of Gaza’s economy were “the erosion of its own internal economic base and its resulting dependency on Israel.”
In 1991 Israeli defense minister Moshe Arens created the Sadan committee, tasked with exploring how Gaza’s economy could be improved. The conclusion was telling: “In promoting the economic interests of the [Palestinian] population, the focus was on wage earners and on the short run. Regarding wage earners, priority was given to increasing their income by employing them in the Israeli economy. Only rarely did the policy opt for the development of an infrastructure and the encouragement of the creation of factories and employment within the Gaza Strip itself. No priority was given to the promotion of local entrepreneurship and the business sector in the Gaza Strip. Moreover, the authorities discouraged such initiatives whenever they threatened to compete in the Israeli market with existing Israeli firms.”
And so the staggering plight of Gazans can be seen as the result of decades of external policies. First, a forced reliance on the Israeli economy and discouragement of sovereign industrial development under Israeli military occupation. Then, a closure of that economic lifeline, as Gazans were over time prohibited from working in Israel and, eventually, cut off from the outside world. And finally, the destruction of their infrastructure through war.
A few weeks ago the Biden Administration sent Secretary of State Antony Blinken to the West Bank to meet with Palestinian president Mahmood Abbas, and promised $75 million in new aid to help rebuild Gaza. But regional history shows that much of these gifts are pocketed by the elites, and fail to improve the lives of the average person. Aid alone cannot fix a dying capital stock.
Through it all, Gazans continue to show incredible persistence. A shop owner named Ashraf Abu Mohammad was quoted by Reuters a few weeks ago as saying, “Life will return, because this is not the first war, and it will not be the last war. The heart is in pain, there have been disasters, families wiped from the civil registry, and this saddens us, but this is our fate in this land, to remain patient.”
But patience has its limits. When I spoke to Uqab, it was clear that he was not going to wait around forever. He told me that he wants to escape and build a better life for his family. And through Bitcoin, he has found a way out.
He said there has been rising demand for bitcoin in Gaza over the past two years, mainly among the youth. Gazans might be physically trapped and economically cut off from the outside world, but Uqab called Bitcoin “a checkpoint that’s always open.”
“It has allowed some people to get out of poverty,” he said. “They are just investing bit by bit, gradually, but it’s working.” He even said that Gazans have been “buying the dip” recently, accelerating their purchasing as the bitcoin price went down.
Some receive bitcoin directly through mobile apps from friends or family abroad. Others use Telegram groups to coordinate in-person meetups to trade cash for bitcoin, or they take cash to brick-and-mortar shops and make the exchanges there. At these stores, Uqab said, the authorities take a cut and keep lists of who is buying and selling. No one yet, he said, has been arrested for Bitcoin use. To store bitcoin on their phones, Gazans might use Binance or Payeer as custodial solutions, or Blue Wallet, which has native Arabic language support, as a non-custodial solution.
Despite warnings from officials, more Gazans join the Bitcoin network every day.
“We have a saying,” Uqab said: “If the government says something is haram, that means it’s halal.”
We spoke about a lot of things: Why Uqab prefers bitcoin to shekels (everything in Gaza is monitored, but you could have a lot of bitcoin, and your family wouldn’t even know); Can the IDF or Hamas stop people from using Bitcoin? (“We’re too smart for this, we’ll always find a way out”); Could Satoshi have predicted that people would be using Bitcoin in Gaza? (“Definitely not”); Had he heard about El Salvador making bitcoin legal tender? (it was a big win, they cheered when they heard the news); Might Gazans adopt Bitcoin faster than Israelis? (They may not take the risk that Gazans are willing to take); And what’s wrong with the banking system? (“We all know charging interest to people you loan money to is sinful”).
In Gaza, Uqab told me, there is no Venmo, no PayPal and no easy way to transact with the outside world. The financial infrastructure is collapsing just as badly as the physical and social infrastructure. But today, he can do with Bitcoin what was impossible before: send and receive money to and from family abroad, quickly, directly, with barely any fees.
For international payments, Uqab said previously a remitter in the Gulf or the U.S. would have to send money through a bank account in a country like China or Thailand, with the money eventually landing in a currency office in Gaza.
“Many middlemen would take their cut,” he said, leaving the recipient with only a percentage of what was originally sent. Also, he said, today, the Western Union offices have started to ask for proof of blood relations, and interrogations and confiscations are frequent.
“With Bitcoin,” Uqab said, “I don’t need to pass any tests or check any boxes. I can just use it.”
Today, he can receive or earn money directly, across borders, and be his own bank in a new financial system.
“It’s so much better,” he said, proudly telling me that he feels at least on some level “peer to peer” with others in the world.
“With Bitcoin, we’re getting on with our lives,” he said. “Inshallah, more Palestinians will discover this technology.”
Uqab hasn’t been able to leave Gaza yet. But at least for now, he is able to save in cyberspace, keeping his money safe from the authorities. It’s a big innovation, the kind that Palestinians desperately need.
In the constant coverage of their political suffering — trapped by Israeli military occupation, Hamas’s terror tactics, the corrupt Palestinian Authority and a largely uncaring world — their monetary and economic situation often goes untold. But money lies at the very root of their struggles.
Palestinians do not have control of their currency. Their lack of economic sovereignty has deeply damaged their growth and prospects for the future. But many like Uqab are turning to Bitcoin as a way to seize financial freedom.
II. A History of Financial Repression
More than 30 years after her 1987 paper on Gaza, Sarah Roy reflected that “events have reduced the Palestinians to a humanitarian issue, deprived (and undeserving) of political and economic rights and dependent on the international community for sustenance, where relief not progress becomes the primary if not the only political option.” She wrote that “Palestinians see the present as better than the future.”
Many reasons for this despair are tied to their financial and economic situation, where Palestinians have become deeply dependent on the outside world, yet cut off at the same time. But the topic of money itself is marginalized and sometimes ignored in the present discourse. For example, in an exhaustive, book-sized report on Israel and Palestine published in April 2021 by Human Rights Watch, the issues of currency, banking, remittances and trade go virtually unmentioned. The Paris Protocol — a hugely important document signed in 1994 that still determines the rules of money and economics for Palestinians — was completely missing.
To dig deeper, we have to ask new questions. Why is the Palestinian economy so dependent on the Israeli economy? Why do Palestinians use the shekel, and not their own currency? Why can’t Palestinians easily order goods on Amazon or receive money from abroad? To learn more, I spoke to Palestinian political economist Alaa Tartir.
Tartir, who now lives in Switzerland with his family, was born in Ramallah and credits his days working as a teenager for his interest in money. When he was 14, he started long shifts at a grocery store to support his family and save up for his education. He could take nothing for granted, and was entirely self-dependent. This motivated him to keep working for seven years until he finished a degree in finance and accounting.
All the while, he grew up studying the economic system around him. He was “dealing with aristocrats and elites,” he said, and began to understand how the Palestinian Authority exploited its position and siphoned off aid and other revenue to enrich itself, while colluding with the Israeli government to leave the average Palestinian in the cold.
Tartir walked me through modern Palestine’s economic and monetary story, which is usually ignored or, at least, takes a backseat to the more well-known political story.
“It is basically hidden,” he said, “even though the dominance of the Israeli actor over the Palestinian actor is entrenched in everything from the use of the shekel to the way that the Israeli government collects our income abroad to how we have no central bank.”
He said money is arguably the driving force behind why the Palestinians are where they are today, where occupation, corruption and war have led to de-development, civilizational stagnation and the erosion of capital stock.
We started in the years after Israeli’s military occupation began in 1967, when its policies initially appeared to help Palestinians from an economic perspective. Trade opened up with other Arab nations, and Palestinians were able to increasingly work in Israel for higher wages than what they could make at home.
But this was with a bigger agenda. In the ’60s, ’70s and ’80s, the Israeli government designed an occupation system that incentivized Palestinians to work in Israel, and prevented them from developing a manufacturing base, increasing dependency on Israeli imports. In the two decades from 1968 to 1987, the industrial share of GDP in the Occupied Palestinian Territories (OPT) (The West Bank, East Jerusalem and Gaza Strip) fell from 9% to 7%. In 1970, there were 59,000 agricultural workers in the OPT, making up 5.4% of the population, compared to just 54,000 or 2.3% of the population in 1993.
Tartir explained that in the 1970s and 1980s, dependence on Israel became near total, as its products exceeded 90% of OPT imports, making Palestinians the second-largest buyer of Israeli goods after Americans. As Israeli economic scholar Shir Hever wrote, “The main source of income to the Palestinians became remittances from Palestinian workers… by 1974, a third of the Palestinian workforce was already employed in Israel… many Palestinian farmers abandoned their farmlands in order to work in Israel, and Israeli authorities took advantage of this and confiscated land that remained uncultivated for a certain period of time.” This is evidenced by how “Palestinian agricultural productivity [fell] sharply from 53% of GDP in 1967 to 13% by the late 1980s.”
By the mid-1980s, Palestinian economic growth began to slow. A collapse in the oil price and extreme inflation in Israel brought Palestinian remittances from abroad crashing down. In 1987, after enormous political frustration, and after their rising quality of life stalled out, the Palestinians rose up in a decentralized movement aimed at self-sovereignty, known as the Intifada.
According to political scientist Tariq Dana, the Intifada was “economic warfare” in two parts: “The first sought to harm Israeli economic interests in the OPT through tactics of civil disobedience such as commercial strikes, boycotting of Israeli products, withholding tax payment, and refusing to work in Israeli marketplaces and settlements… the second involved the Palestinians embracing domestic models of household and neighborhood economies to ensure survival and self-sufficiency.”
Initially, Tartir said, the Israeli government profited from the occupation. Taxes collected outweighed expenditures; Israel was flooded by low wage workers; it obtained a captive market for low-quality exports; and it could exploit, at below market prices, the OPT’s natural resources. The intifada succeeded in making the occupation much more expensive for Israel — after the early 1990s, it no longer made a profit and became a costly enterprise — but the uprising did not succeed at achieving real independence for Palestinians.
III. The Paris Protocol
On April 29, 1994, delegates from the Palestinian Liberation Organization (PLO) and the Israeli government met in France to sign a rarely-discussed document called the “Protocol On Economic Relations,” also known as the “Paris Protocol.”
This meeting was part of the Oslo Accords, an internationally-supported peace process through which Palestinians received political autonomy. Oslo marked an end to the intifada and a start to the Palestinian Authority (PA) and its state-building process. It sparked the age of foreign aid for Palestinians, as previously donors were reluctant to fund Israel when it was a straightforward occupying power. Most notably, it won PA president Yassir Arafat and Israeli prime ministers Shimon Peres and Yizhak Rabin the Nobel Peace Prize for “efforts to create peace in the Middle East.”
Why would the Israeli government give up total control over the OPT, a position it held for the previous 25 years? Palestinian resistance and international and domestic pressure were primary factors, of course, but Tartir thinks a key reason was the ability to be seen as “gifting” political autonomy to the PLO through the creation of the PA while actually retaining economic control behind the scenes through the Paris Protocol.
Today, the Paris Protocol still steers Palestinian monetary, fiscal, tax, agricultural, insurance, industrial and labor policy, as well as tourism and trade with Israel. It was supposed to boost Palestinian trade, allow the PA to establish a formal public sector and generate tax revenue from its citizens, and increase job opportunities.
But according to Tartir, the Oslo process has only fueled a consumerist culture and increased dependence. “Individual freedom and economic sovereignty,” he said, “were sacrificed by Arafat and his cronies for their personal gain.”
The protocol was supposed to be temporary — meant to last only five years until 1999 — but remains in effect 28 years later. The document decreed that Palestinians would not have a central bank, nor their own currency. Instead, they would get the “Palestinian Monetary Authority,” (PMA) which was misleadingly named, because it did not have any.
Israel would control Palestinian monetary policy and its banking system. The Israeli New Shekel would be mandatory legal tender in the West Bank and Gaza Strip. Banks would denominate deposits and loans in shekels. The PMA would have discretion over reserve requirements, but little else. Any change to this system would require a vote from the Joint Economic Commission — an organization that over the years fell into dormancy and Israeli control.
By signing the Paris Protocol the Israeli government cemented the following:
- Control over the amount of customs duties, VAT and import taxes collected on goods heading into the West Bank or Gaza, and the deduction of a 3% “processing” fee for payments cleared to the PA
- The ability to make Palestinian goods artificially expensive, preventing them from competing with Israeli goods, forcing Palestinians to import and allowing Israel a specialized market to export high-margin, low-quality goods that could not be sold elsewhere
- Control over trade policy, giving Israel veto power on what goods enter the West Bank or Gaza, limiting anything considered “dual-use” that could be utilized by the military, including medicine and fuel. This is enforced with the help of the Egyptian government.
- The ability to collect income taxes and social transfers from Palestinians working in Israel or the settlements, which the Israeli government “clears” once a month to the PA, enabling it to delay payments, collect interest on the capital in its banking system, and even use it to pay debts
- Social security taxes, union fees and security taxes were imposed on Palestinian workers, but they did not receive the benefits.
The collective impact of the Paris Protocol reforms can be seen in one simple yet shocking statistic: Palestine’s manufacturing sector declined from 19% to 10% between 1994 and 2011.
Tartir said that this foreign dependence puts Palestinians in a difficult situation because it is so hard to actually get funds from abroad back home. “If I want to transfer any amount of money from Geneva to Ramallah,” Tartir said, “it has to go through an Israeli correspondent bank.”
“As a Palestinian exporter or importer you can’t do anything alone,” he said. “You need to rely on an Israeli counterpart to help you execute your trade. You can’t have your own space at Israeli ports. This element of enforced counterparty not only increases the cost of every transaction but also benefits the Israeli economy. But we have no choice.”
On average, between 1997 and 2017, Israeli-controlled clearance payments and foreign aid flows made up 72% of the PA’s total revenue.
Tartir also points to the lack of fintech in Palestine. “In Ramallah, we have no PayPal, no TransferWise, no Venmo, no Revolut. If you want to receive money from abroad, you have to go pick up the cash from Western Union,” he said.
He explained that even Western Union used to be more flexible, and available at stores all over the West Bank, but due to counter-terrorism measures, these payments are now only receivable through one or two banks. They can take time — often days or even weeks if they are flagged as suspicious by the Palestinian Monetary Authority — and they are hugely expensive: A $500 remittance could cost $30 or $40.
But that’s the best option if he wants to send money from Europe to the West Bank today. A bank wire is a much more difficult process, he said. And, either way, sending anything over $10,000 is “pretty much impossible.”
A 2019 UN report estimated that the total fiscal cost of occupation for Palestinians from 2000 to 2017 was $47.7 billion, or three times the 2017 GDP of the OPT. The report concluded that 3.7% of Palestinian GDP annually leaks to the Israeli treasury as a result of the mechanisms set up by the Paris Protocol.
What was pitched as a step towards Palestinian independence was really a set of rules and policies which increased Palestinian dependence on foreign aid and the Israeli economy. Israel gave responsibility over millions of Palestinians to the PA, but did not give up control of monetary policy, banking, natural resources, transport and borders.
As a result, even though the 1990s were boom years for Israel, the Palestinian economy contracted. Despite hope from the Oslo peace deal, the Palestinian standard of living fell during the following decades, according to some estimates, declining as much as 40% by 2008.
In September 2000, triggered by Ariel Sharon’s visit to the Al-Aqsa Mosque and a drinking water crisis in Gaza, a second Intifada began. The Israeli reaction was harsh, and ultimately devastating for the Palestinian economy.
According to the World Bank, between 2000 and 2003, Israeli restricted the number of West Bank Palestinians permitted to work in Israel by 53%, and Gazans by a staggering 86%. As a result, Palestinian per capita GDP dropped by 40%, surpassing the decline felt during the 2001 financial collapse in Argentina and the U.S. Great Depression in the 1930s.
IV. The Dependency Problem
Taken all together, the Paris Protocol restrictions have led to a chronic Palestinian balance of payments deficit. Typically when a nation finds itself in such a situation, it has a few options. First, it can print more money, devaluing the currency. But Palestine has no monetary discretion, no central bank, no way to do debt monetization, and no way to print money. A second option is drawing down reserves. But given its lack of monetary independence, it has few reserves. Third, would be to borrow through debt financing. But since Palestine is not a nation, few want its debt. So the fourth option is foreign aid.
Palestine has become dependent on foreign aid to function. If the aid checks do not arrive, the government often cannot finance the public budget. Since 1993, more than $40 billion has been spent in the West Bank and Gaza Strip by international donors, making Palestinians one of the highest per-capita recipients of aid in the world.
According to Tartir, “Palestinians have been forced to live in an aid-development paradox: large amounts of aid associated with a downward decline in socioeconomic and human development indicators. In cases like Gaza, those declines have been dystopian.”
Despite all of the aid, unemployment and poverty and debt are up; per capita income is down; the economic base deteriorated; costs of living and food insecurity are up; and the promised foreign investment has not materialized.
A 2010 analysis by Nikki Tillekens showed that 71% of aid to Palestinians ended up in the Israeli economy.
“Of the more than 12 billion dollars of foreign aid given to the Palestinians between 2000 and 2008,” she wrote, “8.7 billion dollars ended up in the Israeli economy.”
International donors are, Tartir said, whether they know it or not, helping to preserve this status quo.
Each year, Washington supplies Israel with $3.8 billion of aid, and remains by far Israel’s primary market for exports and source of imports. This makes for a bizarre situation where even though the Palestinians are highly dependent on aid, Israelis receive much more of it per capita. Before 1999, U.S. foreign aid covered the entire cost of the occupation.
Today, the U.S. still heavily subsidizes the occupation in an arrangement Shir Hever called a “profitable venture” where Israeli receives payments in dollars, but builds walls and pays troops in shekels. As a result, the foreign currency reserves in the Israeli central bank increase, which can be used to pay for trade deficits or to strengthen the shekel, which has appreciated against the dollar 25% over the past 20 years. Hever argued that the Israeli government goes to great lengths to protect this mechanism, even theorizing that a main motivation behind its attack on Gaza in 2008 was to stop an outflow of shekels that was pouring into Egypt through underground tunnels, in effect draining Israeli reserves.
The U.S. government also supports the Egyptian military dictatorship, the Jordanian king and the Saudi tyranny, who all work in concert with Israel to oppose threats from Iran and its allies in the region. Even with their nuclear arsenal, Israelis are understandably wary about the Iranian threat of annihilation, as it is not an idle one. Especially when one considers Israel’s history, where it was attacked upon its independence from all sides. So it would be naive for Palestinians to expect outside support for Israel to end anytime soon.
Supporters of the status quo insist that it is just a matter of time, and that with continued gradual improvements in Palestinian standards of living, that peace will one day come. This idea dates back to the 1970s and the Carter administration, which thought that “happy” Palestinians, “who had steady employment and a functioning administrative structure, would be willing to negotiate for a settlement while under occupation.” The result of this philosophy was to de-link economic aid from sovereignty.
Many Israeli, American and European officials and donors vehemently disagree, and say that they are doing their best to help support a vulnerable Palestinian population under the thumb of corrupt and violent leaders who pose a threat to regional stability.
Tartir also blames the PA for preserving the status quo. As we speak, he said, it is repressing protestors because it does not want anyone to disrupt the deal it has, where its inner circle benefits from cooperating with the Israeli government in running a broken rentier state.
V. Yasser Arafat’s Legacy of Corruption
Fadi Elsalamaeen is a Palestinian democracy advocate. As we spoke on the phone, he told me that Palestinians were protesting in huge numbers against President Mahmood Abbas, who has ruled the west Bank for 16 years. Elsalameen called him “extremely corrupt.”
Yasser Arafat’s kleptocracy was legendary: He was estimated to be worth billions, large chunks of which he plucked out of flows of income coming from the backs of Palestinian workers in Israel, and diverted to his own bank accounts, or to French accounts belonging to his wife.
Elsalameen said that Abbas has now followed in Arafat’s footsteps, where Abbas and family have used their political power to build an empire in industries like insurance, telecommunications, construction and tobacco. According to leaked documents from the Panama Papers, Abbas and his two sons “used power and influence to control the two major Palestinian economic boards (Arab Palestinian Investment Company, Palestinian Investment Fund) and built a West Bank economic empire worth more than $300 million.”
Abbas’s son Yasser owns Falcon Tobacco, which holds a monopoly over the sale of U.S.-made cigarettes in the West Bank. According to Elsalameen, Abbas raised taxes so high on West Bank tobacco producers, to benefit his own import business, that they collapsed. Critics have accused Abbas of pilfering hundreds of millions of dollars of Palestinian state money for personal gain. A 2016 poll showed that 95.5% of Palestinians viewed him as corrupt. He continues to rule by decree.
“I hate Hamas more than Abbas,” Elsalameen said, “but we have to target the head of the pyramid scheme here in the West Bank.”
Elsalameen told me that a reliance on foreign aid has made it so that the PA is less accountable to the people, and has also created a special elite class, separate from the rest of society. Public revenues, he said, have propped up this system for decades. In 2015, “only 16% of the PA’s annual budget was spent on education, nine percent on health and one percent on agriculture,” according to Al Jazeera, but 26% was spent on the security sector, which, Elsalameen said, often targets Palestinians.
Recent protests regard a case where Abbas had activist Nizar Banat, one of his fiercest critics, killed.
“His thugs,” Elsalameen said, “went at night and abducted Banat from his home and beat him to death with clubs. Abbas gave them complete immunity. So the family of the victim said: ‘We’re going to protest until he leaves.’ And then everyone else joined them on the streets.”
Thousands marched across the West Bank and demanded an “overthrow of the regime,” Elsalameen said, in scenes that reminded some of the Arab Spring a decade ago. But Abbas continues to survive. Elsalameen said Abbas stays in power by telling the Israelis, Americans and the World Bank: If you do not have me in power, you’re going to have Hamas.
“That’s how Abbas gets them to protect him,” he said. “He is their client.”
Elsalameen pointed to the failed protests and said that politics is proving of limited use to the Palestinian struggle. “You can only get so far with the ballot box,” he said.
When asked about Bitcoin, he said, “Yes, we can start fighting back peacefully with Bitcoin. It’s something that any young Palestinian can do. You give up price stability, perhaps, but in return you get freedom.”
A challenge, he said, is that “we have to get people to know about it.” It’s a new, weird concept, he said. But once people understand, he has no doubt they will use it. “It’s an upgrade over today,” he said, “where people keep cash under a mattress, or where they wait a month to receive a payment from their family abroad.”
Bitcoin could also fight corruption, he thinks.
“Today, if you bribe the payment authorities, they will let your wire go through faster,” he said. “They grow fat on this. That could end with Bitcoin.”
He noted that in the young generation, many Palestinians are already buying bitcoin.
“They don’t have the S&P 500,” he said.
Elsalameen thinks the fact that both the Israelis and the PA are criticizing Bitcoin is a good thing.
“That’s how you know it’s going to help the average Palestinian,” he said.
VI. From Banking To Bitcoin In Ramallah
With average daily wages at 264 shekels in Israel, compared to 123 shekels in the West Bank, who could blame Palestinians for seeking a higher income elsewhere, even if by doing so they deepen their own dependence?
Given this reality, I asked Alaa Tartir what a decolonial Palestinian economy would look like.
“It’s a future project,” said Tartir, depressingly. “It’s nothing very close.”
He did say that there has long been an idea in the Palestinian discourse of a “resistance economy” which would allow them to stay, resist and gain sovereignty. After the second Intifada, the Arab-Israeli author Azmi Bishara “lamented the lack of a single Palestinian bank, insurance company or printing press, and called on Palestinian investors to ‘begin to think of local economic ventures with their own structures, market, and labor.”
But, Tartir said, they have always been reliant on the shekel and the Israeli financial rails, and “have always lacked the tool to make this happen.”
A Palestinian former banker named Abuwedad thinks Bitcoin can be this tool. He did not want to give his real name for our interview, but spoke to me from his home in Ramallah, where he recently left his job after seven years in the industry. By the time he quit, he was a deputy financial manager for a major bank servicing the West Bank and Jordan. He left because he had grown sick over his personal role in spreading what he considers a financial disease hurting Palestinians: too much borrowing.
“The whole system,” he said, “has been based for the last 15 years on making people borrow much more than what they can afford.”
Even worse, he said, the loans are not used to start businesses or build infrastructure, but are spent on weddings, cars or apartments downtown. According to policy researcher Yara Harari, “over the past 10 years, car loans have jumped sixfold from $40m in 2008 to $250m. Thus, Ramallah… could easily be mistaken for a prosperous city with middle-class neighborhoods full of plush villas and shiny BMWs. But this is just a facade.”
Abuwedad said that with all the easy money — and with no Robinhood, no E-Trade and no access to the world’s top stock markets — people have piled into real estate. Between 1994 and 2016, 80% of Palestinian capital formation was in buildings. This has made costs “surreal.” It could be $100,000 for a small apartment, he said, or $1,000,000 for 1,000 square meters of land, all in a place where the GDP per capita is somewhere around $3,500.
He said that banks are guilty of helping Palestinians increase their reliance on Israel, and decrease their own sovereignty. This is as a result of reforms brought in 2007 by then-Palestinian Prime Minister Salam Fayyad, which Abuwedad said “prioritized consumerism over independence.”
The laws “required banks operating in Palestine to extend 40% of their credit locally… credit facilities skyrocketed from $1.3 billion in 2008 to $7.1 billion in 2018, a 450% increase,” according to “Political Economy Of Palestine, a new collection of essays edited by Alaa Tartir and others.
“Consider a member of the Palestinian security forces making $600 per month,” Abuwedad said. “They can now take a monthly loan 5 times or even 10 times their salary, and with 10% down in cash buy a fancy 120 square meter apartment in Ramallah.”
The banks are happy, of course, as they can make $200,000 over 25 years on every $100,000 they give out. But the people are now indebted, oftentimes for their entire lives. This is the reality now, Abuwedad said, for huge segments of Palestinian society that have borrowed to finance not just apartments but all kinds of personal goods.
Very little borrowing, he wrote, goes into industry, agriculture or entrepreneurship. In 2008, only 7% of credit was used for agriculture and manufacturing, versus 33% for “cars, credit cards, and consumption goods,” per “Political Economy Of Palestine.”
“It’s the same policies that many decades ago forced us away from creating an industrial base and made us reliant on external powers,” Abuwedad said, “just dressed up in new clothes of “state building” and “economic empowerment.”
Today, all Palestinians still look forward to freedom, he said, but the system “makes it much more difficult to focus on that ultimate goal and distracts them with immediate financial concerns.” People, he said, “are living paycheck to paycheck to pay back loans and enrich the bankers instead of saving and investing for their future.”
After leaving his job in banking, Abuwedad worked for a tech company in Ramallah for a few years, then tried to start a business with friends in the online gaming industry. He believes Palestinians can be competitive in eSports — even though they are not today — and that gaming can help with cooperation, team-building, increasing personal dignity and connecting with people abroad. However, there are so many obstacles, mainly, that the internet is not good enough (despite it being blazing fast a few miles away in Israel) and that computers are so expensive.
Abuwedad points to a laptop that might cost $1,500 in the U.S. or in Israel, and said that if he wants to buy the same thing in Palestine, it will cost as much as $3,500. At first glance, one might assume that because Israelis and Palestinians use the same currency, that inflation of the shekel would damage them equally. Abuwedad walked me through why that is not the case.
“When Palestinian imports arrive in Israel,” Abuwedad said, “they get taxed, then they cost money to store as they have to wait to be sent into the West Bank, as truck schedules are very restricted. Along the way, inventory often gets stolen. Then, local sellers mark up the goods to cover their own taxes and profits. By the time the laptop is sold in Ramallah, it could be two-to-three times more expensive than in Tel Aviv, even though everyone is using the same currency.”
Another account said that it took on average “38 days” for Palestinian traders to import and sell goods, while their Israeli counterparts could do it in 10 days. This led to an average cost per transaction of three times as much in Ramallah as in Tel Aviv. This aggressive inflation, Abuwedad said, is true for many consumer products.
“If we could import directly,” he said, “then it would be much cheaper.” He blamed the Paris Protocol, which he said is “outdated” and has not been updated in almost 30 years despite the fact that the world has changed dramatically.
Israeli and Palestinian inflation tracked together through the 1980s, when the shekel crash decimated Palestinian purchasing power, and through the 1990s. But they split after the second Intifada in October 2000. Israel experienced deflation, but the Palestinians experienced stagflation with a fall in income and a rise in prices. Palestinian purchasing power began to massively trail Israeli purchasing power. Shir Hever notes that by 2008, “the same product would have been 32% more expensive in a Palestinian city than in an Israeli city.”
Abuwedad’s plans to get out of this trap through starting a company were foiled by the COVID-19 pandemic, which he said hit the West Bank particularly hard, depressing economic activity. In the time since, he has gotten very into Bitcoin. He said there is a whole community in the West Bank and Gaza, now getting involved. I mentioned to him that global adoption of Bitcoin today is roughly around the same level as it was for the internet in 1997 — about 200 million people, or 2% of the population. He thinks that’s probably the percentage of Palestinians who are using Bitcoin, and said that will grow quickly in the coming years.
But how do Palestinians buy bitcoin?
“We always find the holes,” Abuwedad said.
He told me about a loophole, where the Palestinian Monetary Authority will block transactions from local bank accounts trying to buy cryptocurrency on exchanges. But there’s one exception, the tether stablecoin (USDT). He thinks that because Tether is linked to the dollar, they have let it slide, and so purchases of tether on platforms like Binance go unblocked. Abuwedad said that almost everyone he knows gets into cryptocurrency through tether. From there, he said, they may buy bitcoin as a savings instrument, or stay in tether as a “checking” account. He said that some people also go around the banking system entirely and use Telegram or Facebook groups to coordinate to buy tether or bitcoin in a peer-to-peer way.
Abuwedad seems to know that tether is not an ideal solution. But it works for now, he said. We discussed the idea that in the near future, Palestinians could have Lightning wallets that are “pegged” to a fiat currency like the dollar, and could use those instead of having to rely on tether. He did not know much about Lightning, but during our WhatsApp call, I showed him how to download a Muun wallet, and sent him $5 via Lightning.
“That was really fast,” he said, impressed by the instant transfer from Boston, where I was staying, to Ramallah. I told him there were virtually no fees either, and that got him even more excited. We took a moment to reflect on the fact that it is such a struggle for Palestinians to move money from one place to another, and discussed how game-changing Bitcoin is: from thousands of miles away, I sent him money and we did not have to deal with any customs police, delays, red flags, confiscations or VAT. The Israeli government did not get a cut, and neither did the PA.
He thinks stable Lightning wallets could be huge for Palestinians: a bank account where you do not need any ID, where you control your own funds, where you can transact instantly anywhere in the world for virtually no fees, and where you can choose to peg the value to the dollar or keep your money natively in bitcoin. “That’s the dream,” he said.
Abuwedad considers Bitcoin a peaceful protest against a corrupt, exploitative and centralized financial system: one that he saw from the inside during his career as a banker. The obstacle, according to Abuwedad, is that only a small number of Palestinians are using Bitcoin today.
“Most see it as an investment,” he said, “and not as a currency.”
It will take time, he said, for it to become a mass movement. Education, he said, is very important.
“People have a lot of questions, but over time, they learn, and they use,” he said.
He’s seen reports lately of the Palestinian Authority launching its own digital currency, but he does not think people will trust it. If anything, he said, it may encourage more people to use Bitcoin.
“If we want to make Bitcoin our way to say no to the world, to live free from the Oslo and Paris agreements, then we need to start using it in daily life. And that will take time,” he said.
“We all know,” he said, “that the international community will not give us freedom. So we must take it on our own.”
He told me that he chose the name Abuwedad as Wedad is the name he would call his daughter, if he eventually has one. And maybe, he said, she will grow up in a Bitcoin world.
VII. The New Resistance Economy
Kefah Abukhdeir is a third generation Palestinian-American. She grew up in Atlanta, but settled with her husband in East Jerusalem, and works as an educator.
Abukhdeir’s family originally left Jerusalem when it was under Ottoman rule, fleeing conscription to the U.S. and South America, but retained ties to the homeland. Her father returned to Palestine and became an outspoken dissident against the presence of the Jordanians in the West Bank in the 1960s. Eventually he left for good to the US, where he went to Georgia Tech and started a family in the American south. Like her family before her, Abukhdeir went back to the West Bank to Birzeit University in the late 1990s to learn Arabic. She ended up earning an education degree and eventually moved to East Jerusalem.
“If you want to break a Palestinian mother’s heart,” she said, “tell her that her child is going to study business or agriculture.” To achieve actual independence, she thinks, these two fields are critical, but it is discouraged or even shunned. It is a result, she said, of indigenous economic progress being seen as a “waste of time.”
Abukhdeir has spent the last decade working in education with Palestinian youth, with U.S. State Department programs and through Edureach, an organization that provides for teacher training and extracurricular programs for kids. There, she faced a dilemma: to be more competitive, the students have to learn English and go to school in Israel. She knows this continues to prolong the situation where Palestinians remain dependent on the world around them, and that it boosts the economy in Israel, but she wants the best future for the children, who want to be as employable as possible. “We stay up all night debating this,” she said.
“I started to feel guilty because I felt like I was facilitating brain drain,” she said. “If the kids are successful, they’ll go to college in Israel or the U.S., and they don’t want to come back.” They are then overqualified for jobs in Palestine. Best case, they could end up working for an NGO or foreign entity, like her. “We aren’t really part of the local economy,” she said. “We aren’t helping to reinvest.”
Her experience encapsulates the dilemma for many Palestinians since 1967. You could stay at home, or you could go work in Israel for higher wages and do more for your family. But you made a tradeoff, bringing economic activity and development there, instead of back home.
“Independence is financial,” Abukhdeir told me. “If we don’t have financial freedom, nothing is going to change.”
Abukhdeir pointed out that the currency usage in Palestine has varied over time. People still use the Jordanian dinar, as well as U.S. dollars, but lately, she said, the shekel has become even more popular, even in Gaza.
“Easily 80%” of your daily transactions are in shekels,” she said. This means that nearly every transaction a Palestinian makes “is supporting and deepening reliance on Israel.”
Growing up in Atlanta, she said that she learned a lot about the American civil rights movement, and studied similar movements in South Africa and Ireland.
“One of the first things they’d do,” she said, “is set up an independent economy. But we don’t have that. We just have red flags, confiscations and taxes that pay for benefits that we don’t even receive.”
Recently Abukhdeir started spending time at tech hubs in Ramallah and Jerusalem. There, she said, she was introduced to “tech colonialism.” Here, Israelis would come into recruit the best and the brightest, but there were no Palestinian companies recruiting.
“We’re creating a labor force for the ongoing occupation,” she said. “Tech is important because we need a plan that does not require raw resources. We can’t own land, we can’t manufacture — so what can we do?”
To make a change, Abukhdeir is looking at Bitcoin. She is part of a movement that will try to map the Palestinian business ecosystem, both Palestinian-owned businesses in Israel, as well as enterprises in East Jerusalem and the West Bank, and encourage new practices.
The idea is, if you’re a Palestinian-owned business, you can offer to take bitcoin for payment. It would, she said, spark curiosity, launch a circular economy, encourage more people to learn about Bitcoin, and teach them more about how money works.
“This,” she said, “is how we could end our reliance on the shekel.”
Today, Abukhdeir has teachers working for her in Gaza. She says that paying them is hugely complicated. “I can’t use PayPal, even though I’m a dual Israeli-American citizen. Even with my financial privilege, it’s hard to do,” she said.
She describes how she might take money out of her Israeli account through an ATM, deposit it in a Palestinian bank — which she could only open with her American passport — and then she can make a wire to the teacher’s account. This takes time and is expensive. But with Bitcoin, she said, she can send value instantly to the teacher in Gaza.
She said that she’s still putting the future picture together in her head.
“With Bitcoin, you could build a company that’s totally independent, where you don’t have to use a PA bank, and where you don’t have to rely on the shekel and the Israeli economy,” she said.
Abukhdeir thinks that change will ultimately come only through “huge amounts of violence or huge amounts of economic activity” and thinks the latter is the only way to find success. “We can’t settle for a half-baked solution,” she said, pointing to how the Oslo process failed.
“We need to escape completely,” she said. “If we don’t opt out of the currency, we are just going to end up strengthening the system.”
VIII. The Israeli Bitcoin Community
It is clear that some in the Palestinian community view Bitcoin as a way forward. But what about their Israeli counterparts? For background, I spoke to several Israeli Bitcoiners on the condition of anonymity.
Some are worried about the political environment in Israel right now. Some say it’s “not that bad,” but one entrepreneur told me that it is risky to do anything that could be described as “left-wing” (such as helping Palestinians through Bitcoin) and that it is getting harder and harder to speak one’s mind.
“The sentiment is getting worse by the day,” he said. “It reminds me of bad days in world history.”
He went on: “It makes it hard to think about a bright future here. It’s a huge dilemma about whether to even stay in the country.”
But while he said connecting with Palestinians about Bitcoin use has not been a topic or priority at the meetups in Tel Aviv so far — “never,” he said — he thinks it could be successful.
He said Bitcoin continues to build bridges, not walls. And when he stopped to think about how Israelis could actually extend freedom to Palestinians, Bitcoin could be a way.
“It’s not fake freedom,” he said, “like the kind we have tried to give before.”
“I’m here for coexistence,” the entrepreneur said. “I want a single state solution. I want one country with bitcoin as the currency, with the same rules for everyone. How Bitcoin can help create this atmosphere of co-existence is very important. It’s not about creating two states: it’s about reducing the power of the state.”
IX. An Israeli Settler’s View On Bitcoin
Many Israeli Bitcoiners are relatively progressive, and even sympathetic with the idea of helping Palestinians with open-source money. But what about nationalist Zionists? Or even settlers? Surprisingly, at least one of them is trying to promote Bitcoin in Palestine.
Jonathan Caras is an American tech entrepreneur and Bitcoin advocate who has been living in the West Bank for 10 years.
“I can see Ramallah from outside my window,” he told me as we spoke by video chat.
Today some 14 million individuals — approximately half Jews and half Palestinians — live between the Mediterranean Sea and Jordan River under the economic control of the Israeli government.
On one side in the state of Israel there are nine million citizens living in a robust, if eroding, democratic society. On the other, there is a military occupation of nearly five million Palestinians, now entering its 54th year. A 700-kilometer barrier — which is in many places a literal concrete wall — has been under construction for two decades, and separates the two. Caras and hundreds of thousands of other Israeli settlers live east of this barrier.
According to the Israeli civil rights group B’Tselem, “More than 2.6 million Palestinian subjects live in the West Bank, in dozens of disconnected enclaves, under rigid military rule and without political rights. In about 40% of the territory, Israel has transferred some civilian powers to the PA.” However, it reminds us, even there “the PA is still subordinate to Israel and can only exercise its limited powers with Israel’s consent.”
Sixty-one percent of the West Bank’s territory is classified as Area C — comprised of vast open spaces and farmland — and is directly controlled by the Israeli military. A 1995 agreement decreed that resource-rich Area C would be “gradually transferred to Palestinian jurisdiction” by 1997. But that has not happened. Instead, Palestinians have been prevented from harvesting or investing in this land, and Israeli settlers and companies have increasingly colonized the area.
Israel utilizes many resources in Area C, including solar power for more than 10,000 Israeli homes, water sources and farmland. At the same time, it confiscates Palestinian property. In the past 20 years, Israeli forces have, for example, uprooted more than one million productive Palestinian trees. Israel and Jordan make $4.2 billion per year selling minerals like potash and bromine from the Area C regions around the Dead Sea. A World Bank report states that Palestinians could increase their GDP by almost 10% if they were allowed to invest in this operation, too. In total, the report concludes that Palestinians could increase their GDP by 35% if they were allowed to harness Area C for agriculture, minerals, mining, construction, tourism and telecommunications.
The Israeli military has closed off most of the West Bank to Palestinian civilian access, and has installed checkpoints and barriers to stifle human movement in the remaining Areas A and B. A dizzying array of restrictions — imposed in the name of counter-terrorism — limit the ability of Palestinians to move, build, go abroad, marry, buy property, work and vote to participate in the system that governs them. The technology used to enforce this system is sold by Israeli companies like Candiru, Cellebrite and NSO Group to governments around the world. Marketed as tried and tested in the West Bank and Gaza, these surveillance products are highly sought after and considered world-class.
Hundreds of thousands of Jewish settlers now live permanently in West Bank settlements east of the Green Line, the border established as separating Israel and Palestine after the 1948 war. These settlers are financially incentivized and subsidized to move there by Israeli policies, including tax and housing benefits. In total, there are more than 280 Israeli settlements and a variety of industrial zones in the West Bank, with more than 60 outposts created in the past 10 years, all in contravention of international law. The maps of this shift in control are striking.
Caras is one of them. He said he is a “religious Zionist settler.” His goal is to “reinstate the Kingdom of David and build Solomon’s Temple.” Twenty years ago, he first came to Israel, and realized that “the best way for me to fulfill my Biblical obligation is to settle on an empty hilltop in the West Bank.”
In the past few years, Caras has given a number of lectures about “how technology can promote mixed interaction and co-existence.” He said that Bitcoin allows humans to cross borders that previously were impassable: legal, financial, and ideological.
“It allows us to come together,” he said. He sits on the Judea and Samaria Chamber of Commerce, and interacts frequently with Palestinians as part of his role.
He said that if he does business with a Palestinian, that could be a danger to their life. “If I want to start a business with my neighbor, his children could be killed,” said Caras. “So Bitcoin allows us to work together and keep him safe.”
He tells me that he’s seen cars get burned to the ground as a warning message for doing business with Israelis.
Caras argued that Palestinians have actually benefited from the strong shekel, comparing their plight with that of Lebanese, Syrians, Egyptians and others in the region who have suffered from high inflation or hyperinflation. He says Hamas and the PA are corrupt, but that the shekel has partially protected Palestinians from their misrule by providing a reliable unit of account, medium of exchange and store of value.
When I mentioned to him that Palestinians still suffer from significant price inflation, he said “a glass of water is always going to be more expensive in the desert than at Niagara Falls” and said this doesn’t have to do with the money, it has to do with control over the borders and goods and services.
“In the West Bank, Palestinians can’t just get stuff on Amazon,” he said. “There’s always going to be a price discrepancy.”
He said the restrictive economic regime that holds Palestinians back is “stomached” by the Israelis and the international community because of violent threats from Palestinians. “As long as Hamas and the PA are aiming to annihilate the Jewish state, there isn’t a hope for Palestinians to have the same prices as in Tel Aviv,” he said.
Ultimately, though, from a religious perspective, Caras thinks that the shekel and all fiat money will be “viewed as unethical and immoral from an Islamic Judeo-Christian perspective.”
He said that “fiat is rent-seeking, clearly a form of theft, you are paying interest to the government for building your own family’s wealth.”
He contrasted this to commodity-based money, like gold and bitcoin, where “every member of society is equal underneath heaven.”
With Bitcoin, “we all know what the rules are and we know that we can participate without people changing the rules in the future,” he said. “This is not the case when we work in a fiat system, where it’s by nature a two-party system. There’s the oligarchy of fat cats who set the monetary policy and control the flow of funds, and then the peons and serfs who are subject to its enforcement. It’s built into the name ‘fiat’ that we are not equals.”
Caras believes we are “in a messianic era” and that “Biblical prophecies are unfolding” and there’s “a lot of evidence” that Bitcoin falls under those prophecies.
When asked if he thinks the Israeli government will try to ban or restrict Bitcoin as a tool of terror or resistance, he said the Israeli people know that technological innovation and opportunity far outweighs the risks. He said that if Hamas is trying to circumvent banking restrictions by collecting funds in Bitcoin (as the Israeli government has recently alleged, seizing bitcoin on exchanges that it claimed was connected to Hamas), then that is more easily regulated than Caras “paying a gardener or web developer in bitcoin.”
He said the new Israeli prime minister has a background in cybersecurity and entrepreneurship and said a ban is unlikely.
“Banning Bitcoin,” Caras said, “is as ridiculous as banning marijuana. If I have a seed in my pocket, I can plant fields of crops. If I have 12 words in my head, you can’t stop me.”
Caras pointed out that Bitcoin is already much larger by market cap than the shekel today. He thinks countries are going to be forced to add bitcoin to their balance sheets as a reserve asset and make it legal tender, or try to ban or fight Bitcoin, a battle they will lose, and have to buy in later at a higher price.
He is a big critic of central bank digital currencies (CBDCs), and talked about how cash is helpful because it is unstoppable and private.
“I would vehemently oppose replacing cash with a CBDC: it’s a form of control,” he said. “It can hurt your business if Twitter freezes your account for 72 hours. It can literally kill your business if there is no cash in society and the government doesn’t like who they saw you holding hands with on a security camera and so they freeze your account.”
But cash, he said, is still subject to debasement, and it hurts people’s ability to save for the long term.
“It will allow for a generation that believes in their ability to invest in themselves and to put money away every month that can be time locked, that can be used as collateral,” he said. “This will have a socio-economic impact, eventually, on a personal and national level for Palestinians and Israelis.”
“I put my money away for my children in Bitcoin,” he added. “I have more faith in Bitcoin than the Central Bank of Israel over the next 20 years. And I’m a big supporter of Israel. Think about that.”.
Caras does agree that paying someone in shekels is a power dynamic.
“That resonates with me,” he said, which is why he always offers to pay people in bitcoin first. “Even if they are just going to dump it,” he said, “first they’ll have to create a wallet, and begin to understand it.”
When asked if he thought Israel might lag behind Palestine in the adoption of Bitcoin, he said he is lobbying the Israeli government to be on the cutting edge. But if Palestinians made the switch to a Bitcoin standard first, he thinks it would cause Israel to “chase after them.”
Caras said he does not view himself as unbiased, and knows that some Palestinians will call him a war criminal, and a “physical representation of all of their hardships.” But, he said, he’s still been able to sit down and geek out about Bitcoin with Palestinians.
“We all want financial sovereignty,” he said. “I am interested in prosperity for everyone, not just the Jews.”
X. The Fight for Sovereignty
Many Palestinians are trying to push back against Israeli settlements, and some view Bitcoin as a possible tool that can aid this effort. To learn more, I spoke to Adam Albarghouthi, who works for the Palestinian Social Fund, an organization that is crowdfunding from the Palestinian diaspora to seed agricultural activities in the West Bank.
Albarghouthi said Palestine is “totally dependent on foreign aid and imports. Our production capacity has dwindled. We don’t have sovereignty.” He believes that the future is in “producing our own food.” His plan is to grow cooperatives across West Bank villages, and launch a new governance paradigm, not dependent on foreign aid or the Palestinian Authority, but one “that the individuals and communities own.”
It is a left-wing vision, for sure. I mentioned to him that there’s also a libertarian Bitcoin community in the U.S. that is trying to achieve agricultural self-sufficiency, to go “off grid,” raise animals and crops, and seek freedom and distance from the federal government.
“At the end of the day,” he said, “we are all human. We are occupied by Israel and what we are seeing now is that an agricultural solution is necessary. The Americans you speak of might be occupied instead by consumerism, but they seek the same thing. It’s two sides of the same coin.”
Achieving agricultural independence is hard. Israeli settlements, Albarghouthi said, are expanding.
“They are cutting us up geographically into Bantustans,” he said. “First they take the hilltops as vantage points, and then they go for the areas with the most fertile soil — for example the region around the Dead Sea — these places are great for growing produce all year round.”
According to B’Tselem, only one-eighth of the land under Palestinian control is even under cultivation because of Israeli’s strict permit regime.
“We must start with what we have,” he said: “the land around our houses. We can start to build a resistance economy that is more and more decentralized.”
Agricultural self-sufficiency was the spirit of the first Intifada, Albarghouthi said, but that was sacrificed by Yasser Arafat and his PLO cronies for money and personal gain.
“We have to try again,” said Albarghouthi.
A big problem Albarghouthi and his team face is that any money going into Palestine is inspected by Israel. The financial borders are controlled. Money gets delayed, taxed, trimmed and sometimes confiscated.
“Whenever they deem us a risk, they can freeze our assets in seconds, even if we are in Canada,” he said. So, he said, they are planning to raise money in bitcoin, and sidestep the whole restrictive system. His team is currently working on setting up BTCPay Server, an open-source payment processor.
But Albarghouthi wants to make it clear that an anti-colonial currency is, by itself, an incomplete solution.
“Monetary freedom must go hand-in-hand with building our production powers,” he said. “At the end of the day, any currency is an alias to resources, and we have to generate our own resources from nature and build them into valuable products that can be used in our society to further innovation and education and healthcare and food security.”
“In doing so, Palestinians should use a currency that we control, not one pegged to the Israeli economy or the petrodollar or anything else,” he added.
XI: The Future Of Bitcoin In Palestine
A few weeks ago, the Israeli government publicly announced the seizing of bitcoin funds connected to Hamas. It seems certain that the IDF will begin to demonize Bitcoin as a tool of terrorists and perhaps, make it harder for Israelis and Palestinians to use.
Given that the Israeli government has prioritized centralizing as many economic flows as possible under its control into and out of Gaza and the West Bank, any money moving outside “official channels” will likely be deemed suspicious. This could be a deterrent to future adoption.
But already today, Paxful and LocalBitcoins have vibrant peer-to-peer marketplaces in Palestine. If Bitcoin could become adopted by hundreds of Palestinian businesses, and hundreds of thousands of individuals, then it could become a remarkably powerful peaceful protest.
There is a possibility here for Palestinians — or any vulnerable population, whether trapped by foreign occupation, domestic authoritarianism, a collapsing economy, or a structural lack of opportunity — to adopt Bitcoin as a new currency. Millions of individuals are already making this choice in Turkey, Argentina, Nigeria, Iran, Lebanon and beyond.
More than two-thirds of Palestinians are under the age of 30, and more than 70% have internet access. Young people are more comfortable with the idea of mobile money, and will be looking for technological solutions to their problems. It is a risk, but adopting Bitcoin as a circular economy could very well give Palestinians a leg up on their neighbors, and position them relatively well for the next century.
El Salvador has provided a national template of how Bitcoin can be used not just as a savings instrument to invest in the future, but also as a payment network that can allow citizens to connect with anyone in the world instantly.
Could Palestine be the El Salvador of the Middle East? President Nayyib Bukele is, after all, Palestinian. His grandparents originally emigrated to El Salvador from the Jerusalem and Bethlehem areas during the fraying of the Ottoman Empire. His father even converted to Islam and “became a prominent imam in San Salvador and a vocal defender of the Palestinian cause.”
Bukele has been quoted as saying that he is very proud of his Palestinian origins, saying he “would like to see a thriving Palestinian state.” It is ironic that a person of Palestinian descent would be the first world leader to adopt bitcoin as a national currency.
There is no question that the Israeli government, American government, Palestinian Authority, World Bank and United Nations would all oppose such a move. They are all too invested in the status quo. So any adoption would have to come from a people power movement.
As for traditional attempts at reform, in the last few weeks there has been discussion of restarting the “Joint Economic Committee” (JEC) — the organization created at the time of the Paris Protocol, which would ultimately have the power to make a new currency for Palestinians. The JEC has not met since 2009 and has largely been used to oversee operations in the OPT, but Israeli and PA ministers are planning to revamp the JEC and “remove obstacles” to PA economic activity.
Palestinians have seen this movie before. An Israeli government push to help the PA has typically not done much for the average person in the West Bank or Gaza, beyond siphoning more money to PA leadership and introducing new controls on the ground. The stated goals this time are to issue 17,000 more permits to Palestinian laborers to “work in construction and industry in Israel” and to bolster the Palestinian Fuel Administration. Again, any reform here is likely to deepen Palestinian dependence on the Israeli economy and put the PA on additional life support.
Recently, the news broke that the Palestinian Monetary Authority is mulling a “central bank digital currency,” a new kind of asset meant to replace banknotes and coins with a digital central bank liability that individuals would hold on their phones. Critics have been blunt: “It’s not going to replace the shekel or the dinar or the dollar. It’s certainly not going to be a store of value or a unit of accounting,” said Barry Topf, a former senior advisor to the Bank of Israel.
Palestinians have not been able to mint their own cash — per the Paris Protocol — but even if they could, there’s no guaranteeing that the Palestinian Authority would not abuse its power and create massive inflation. Its track record on fiscal matters is poor. Topf might be right.
Moreover, the creation of a “Palestinian” currency (digital or otherwise) runs the risk of prolonging the power imbalances that exist today with the Palestinian economy. Would it provide financial “inclusion” — or global financial exclusion?
Even worse, transitioning the Palestinian economy to a digital one — whether it’s controlled by the PA, World Bank, Israel or anyone else — would be disastrous for the small amount of freedom that Palestinians do receive from cash and their informal economy, where they can save and transact outside of government control. A CBDC would enable greater blacklisting, confiscation and surveillance, no matter who is in charge of design.
XII: Activism Beyond Virtue Signaling?
A lot of the online activism for Palestine can be classified as “virtue signaling.” What does posting #FreePalestine actually achieve? Usually, very little. But by helping someone understand how to use Bitcoin, one can help them achieve a degree of real freedom: the ability to protect value from confiscation and to connect with anyone in the world.
For a people whose history is so filled with confiscation, Bitcoin gives Palestinians a way to take the fruits of their labor and time and lock it into an asset in cyberspace, beyond the control of Hamas, Israel, the PA or the World Bank, and secure it with math. It is a peaceful protest, a digital shield, that could lead to big change.
This has been underscored by the many interviews that I conducted to inform this essay. Beyond those whose stories were told, I spoke to a half-dozen other Palestinians for background. They all seemed to echo a few things:
First, as one said, “If we’re not taking matters into our own hands, then no progress will be made.” There is a tremendous (and understandable) lack of trust of the authorities on all sides, and a realization that the status quo will continue unless something new is tried.
Second, if only a few people are using Bitcoin, then everyone seems to agree that the authorities would go after them and put them in jail. But if 100,000 people are using it, then there is nothing they can do. Building a movement is paramount.
Third, if critics on the left do not get it, and continue to attack Bitcoin from their position of privilege, then, said one, they “seem to be more interested in talking about the problem than actually fixing it.” They went on: “Where’s their solution?”
The left traditionally dislikes or ignores Bitcoin. Left-wing critics and economists often call it useless: a Ponzi scheme, a tool for criminals, an environmental disaster and so on. Amnesty International and Human Rights Watch continue to be silent on Bitcoin. Yes, they have done admirable work to detail the suffering of the Palestinians, but why not speak up about a technology that so many of them are already using for empowerment? The same can be said for the international community in general. If they actually want to get involved in changing the situation on the ground, it has to involve changing the money. And Bitcoin is one way to do that.
The Bitcoin silence is perhaps most sadly reflected by a search for the term on the websites of the establishment Palestinian economic think tank MAS or the Israeli civil liberties group B’Tselem: zero results. It is clear that Palestinians will continue to adopt Bitcoin. But it remains unclear if their supporters around the world will help them in this regard.
Today, Palestinians have no monetary independence, are increasingly forced to use the currency of their occupier, are unable to increase their capital base, have become more consumerist and debt-saddled, are entirely reliant on foreign aid and, in Gaza, face civilizational collapse.
When Sarah Roy reflected recently on “what is to be done,” one of her conclusions was that “knowledge production is itself a form of resistance.”
There is nothing to lose by sharing information about Bitcoin, which has already helped so many Palestinians. Perhaps the world’s largest open-source money project can help, where everything else has failed.
XIII: Fix The Money, Fix The World
In the Bitcoin community, there is a saying: “Fix the money, fix the world.”
Obviously, money is just one part of our social fabric. But it is a very important part, and at the end of the day, if Palestinians are not able to fix their money, they will not be able to fix their world.
At the end of my call with Uqab, he told me that many people were becoming so desperate in Gaza that they were selling their homes for Bitcoin. It was the same for businesses. “Any enterprise that opens in Gaza is doomed to fail,” he said, “so the owners would rather sell it than keep it.”
He said their calculation was the following: Real estate is “going to zero” in Gaza, so worst-case scenario, if bitcoin crashes, “it is the status quo for us.”
But if bitcoin continues on its historical trajectory and gains value versus fiat currencies? “Then we have a door to freedom.”
“I’m saving up for my kids,” he said, right before we hang up. “Bitcoin is going to be my ticket out of here.”
This is a guest post by Alex Gladstein. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
Mastercard Furthers Investment Into Crypto Card Integration
Mastercard is queuing up a full suite of crypto partners, according to an announcement this week, in efforts to streamline its card program for crypto wallets and exchanges. The company initiative seeks to provide crypto companies with a card option that gives crypto-holders the ability to spend their digital assets anywhere that Mastercard is accepted.
Swipin’ New Partnerships
The flurry of partnerships include:
- Evolve Bank & Trust
- Metropolitan Commercial Bank
- Apto Payments
- i2c Inc.
- Galileo Financial Technologies
Each partner looks to play a unique role in Mastercards revitalization to the firm’s already existing Crypto Card Program. Evolve Bank & Trust and Metropolitan Commercial Bank are set to likely be the card issuers while Uphold and BitPay provide supporting crypto wallet technology infrastructure. Meanwhile, i2c Inc., Apto Payments, and Galileo Financial Technologies will support processing and program management for Mastercard.
Paxos and Circle, arguably two of the most recognizable names in the list, will support Mastercard with the conversion of crypto-to-fiat by way of stablecoins; the process will allow Mastercard to have stronger internal stability and ideally allow more banks and crypto partners to get involved down the line. For Circle, Mastercard is another strong partnership in the mix after the firm locked in Visa as a partner back in December 2020. Circle, of course, is a major payments infrastructure firm most known for being the principal operator for the USD Coin
” href=”https://www.newsbtc.com/dictionary/coin/” data-wpel-link=”internal”>Coin (USDC).
Mastercard is one of the largest financial services firms across the globe, and is now doubling down on crypto-integrated efforts. | Source: NYSE: MA on TradingView.com
Related Reading | As Bitcoin Drops Below $30k, Stablecoins Surpass $100 Billion In Total Supply
What It Means
The announcement comes less than a month after primary Mastercard competitor Visa shared that their customers had spent over $1B on crypto-linked cards just mid-way through the calendar year. Consumer demand is undoubtedly making waves when it comes to mainstream corporate adoption in the crypto-sphere.
“Today not all crypto companies have the foundational infrastructure to convert cryptocurrency to traditional fiat currency, and we’re making it easier” said the firm’s EVP of digital asset and blockchain products & partnerships Raj Dhamodharan in the release. “Mastercard expects to deliver on our promise of consumer choice to provide options to people around the world on how and when to pay.”
Elsewhere in the release, established partners showed excitement around a move that clearly signals increased crypto adoption; BitPay co-founder and CEO Stephen Pair noted that the partnership shows promise to “accelerate consumers’ use of crypto as a means of commerce.”
Could a new race in stablecoin-to-fiat adoption for major institutions be well underway?
Related Reading | This Is Why Grayscale Is Doubling Down On Its DeFi Bet With New Fund
Featured image from Pixabay, Charts from TradingView.com
Why Sustainability Is Essential for the Future of Money
‘Ethereum Improvement Proposal 3675’ for the Eth2 merge launches on GitHub
Michael Saylor Brings The Thunder To Venezuelan Bitcoin-Only Podcast
Amazon seeks new exec to oversee digital currency strategy
Axie Infinity refreshes record high as AXS ascends 131% in just 3 days
Ethereum At A Discount, Why ETH Looks Like BTC In 2017
Data fails to conclude that Bitfinex shorts are depressing Bitcoin price
How NFTs and art will benefit from each other moving forward
Polygon (MATIC) Announces Launch Of New Blockchain Project, ‘Avail’
Elon Musk tweets his support over proposed Dogecoin changes
Ethereum4 weeks ago
Ethereum At A Discount, Why ETH Looks Like BTC In 2017
Bitcoin4 weeks ago
Data fails to conclude that Bitfinex shorts are depressing Bitcoin price
Blockchain4 weeks ago
How NFTs and art will benefit from each other moving forward
News4 weeks ago
Polygon (MATIC) Announces Launch Of New Blockchain Project, ‘Avail’
Alt Coin4 weeks ago
Elon Musk tweets his support over proposed Dogecoin changes
Bitcoin3 weeks ago
No Bitcoin Monthly Support Until $14K
Blockchain3 weeks ago
How DeFi will kill the retail bank
Analysis4 weeks ago
Bitcoin Could Fall To $10K, Louis Navellier